Could KY’s ‘poster child for water woes’ finally get state money for improvements?
Improvements to an Eastern Kentucky water and sewer district notorious for high costs, filthy tap water and aging infrastructure top a legislative list for possible funding in 2026, and some local leaders believe it is their last best chance to turn the page on decades of infamy as the commonwealth’s worst utility.
What comes next for Martin County’s water and sewer system is matter of a newly simmering controversy.
About a dozen projects to rehab water and sanitation infrastructure at a cost of $39.7 million are among the top 20 scorers of more than 150 eligible applications the Kentucky Infrastructure Authority recommended last week for funding by the General Assembly.
Legislators will use KIA rankings to invest in projects from a pot of money they carved out of the budget in 2024 to bail out the most underfunded and deteriorating water and sewer systems. Despite allocating $75 million each for fiscal years 2025 and 2026, only $53.4 million remains after lawmakers released their first round of funding last year and the KIA awarded a handful of emergency grants.
Martin County, well known for its habitually poor water quality and high costs, was notably absent from last year’s $87.3 million appropriation, a fact local leaders have chalked up to bad application management on the part of the area development district and KIA scoring they say missed the mark.
Now, however, officials believe they finally have a shot at making meaningful, wholesale improvements to the system.
“I just can’t emphasize how important this is,” Martin County Judge-Executive Lon Lafferty said. “We all know that Martin County, Kentucky, has been the poster child for water woes for so long, and it holds us back in so many ways. It’s so critical for economic development and our ability to stand on our own that we meet this basic necessity.”
Not everyone is convinced local leadership is prepared to manage the county’s water system alone, however. And funding members of the county water and sewer board believe they will finally secure in 2026 remains the fragile truce holding back a disagreement over what comes next for the system’s management.
Board seeks local control again
Motivated by systemwide improvements and the favorable rankings Martin County projects received in KIA’s funding recommendations this month, the county’s water and sanitation district board filed a Kentucky Public Service Commission motion Dec. 3 requesting an end to state oversight and third-party system management.
After years of shoddy management, the PSC ordered the board to seek outside management in 2018. The board landed on Missouri-based Alliance Water Resources, a for-profit municipal water firm that has overseen gradual improvements to the county’s network of leaky, aging water pipes and pumps.
A little over a year ago, Martin County regularly lost more than 70% of its treated potable water to network leaks. Now, with the help of Alliance, the board is reporting roughly 40% losses. Alliance has helped replace more than 90% of the county’s customer meters with the help of state funding.
Seven years later and Laffery said he believes the county is ready to manage the system without the assistance of a for-profit venture. No one will care as deeply and perform services as cost-efficiently as Martin County residents and workers, he said.
“We have met the tenets of that [PSC] order, and we feel that we now have in place the necessary board and structure to begin to take back our system,” he said.
Not everyone agrees, however. Nina McCoy, secretary of the Martin County Water and Sewer Districts board and chair of a grassroots organizing committee advocating for improved water resources, voted in favor of the county’s petition to end PSC oversight.
Now she said she believes that was a mistake. Wednesday, she sent the PSC a letter publicly revoking her vote, citing the county’s intention to end its contract with Alliance Resources.
“I don’t support losing Alliance Water Resources right now,” McCoy said. “We are improving, but we are nowhere near the ability to make sure that we are able to hire and maintain the type of workers and equipment that Alliance is able to give us. We’re asking the state for more help right now. We’re not ready to do this alone.”
In July, Martin County’s Mountain Citizen quoted Lafferty blaming the county’s lack of attention from lawmakers in the last General Assembly grant cycle partly on Alliance Resources. He said ongoing issues with brown, discolored water are the company’s responsibility. Meanwhile, the fiscal court and water and sanitation board have little say over day-to-day Alliance operations because of the standing PSC order.
Board casts blame for latest mistakes
Lafferty told the Herald-Leader Wednesday it is not his intention to immediately end the Alliance contract, but he said the county is close.
Tim Thoma, a municipal water and sewer design expert Lafferty appointed as chair of the county’s board last year, has delivered the shot of adrenaline the water system needed, the judge-executive said.
In a year’s time, Thoma has rewritten the system’s infrastructure maintenance plan and begun allocating resources to the water network’s most pressing needs, Lafferty added.
That is not enough to make up for the resources Alliance has brought to the table, McCoy contends. She said she fears the judge-executive and his board chair are going to “steamroll” Alliance out of the county, losing vital access to its technology, training, employee benefits and more.
Earlier this year, Thoma directed the board to sue the Big Sandy Area Development District for its management and administration of a raw-water intake system rehab project. The board is seeking more than $1 million in damages it says it has incurred due to the costs of renting a diesel generator to pump water from a nearby river to a pre-treatment resevoir.
More than three years after construction of the improved water-intake project began, it is still incomplete. Meanwhile, Big Sandy handled the water district’s request for grant funding last year, and Thoma said he believes it was that organization’s mismanagement that led to Martin County being shunned.
“Big Sandy ADD is running projects that they have no business running,” Thoma told the Herald-Leader.
The area development district did not immediately respond to a request for comment.
This story was originally published December 12, 2025 at 5:00 AM.
